A foreign service provider may conduct its activities in Finland either by establishing a branch or by providing its services across the border. Commencement of activities is contingent on the authorisation or notification procedure.
Provision of service to Finland from EEA
The Financial Supervisory Authority (FIN-FSA) must be notified if a service provider from another EEA country intends to establish a branch to a credit institution, insurance company, investment company or management company in Finland. FIN-FSA must also be notified if a service provider from another EEA country intends to establish an investment fund in Finland or provide payment services across the border to Finland. A foreign payment institution can also appoint an agent to act on its behalf in Finland. In this case, the notification is made by the regulatory authority of the service provider’s home state. The cross-border provision of services also requires a notification from the regulatory authority of the home state. We keep a list of these notifications.
Foreign management companies may market in Finland investment funds managed by them in accordance with the Mutual Funds Act and the UCITS Directive. Similarly, Finnish management companies may market their investment funds in the EEA. The commencement of marketing requires either a notification procedure (UCITS funds) or permission procedure (non-UCITS funds).
Operation in EEA under so-called management company passport
A management company operating in the EEA may manage or establish an investment fund in another EEA member state either through a branch or without establishing a branch. In this case, the regulatory responsibility is divided between the competent authority of the home state of the management company and the competent authority of the country of registration of the investment fund. For example, the FIN-FSA supervises the organisation of operation, stability of operations and reporting of Finnish management companies. FIN-FSA does not supervise investment funds managed or established by a Finnish management company in another EEA member state a under management company passport; instead, these are supervised by the competent authority of the relevant member state. Hence, the management company may be based in another country than the investment fund, and the management company and the fund may be supervised by the regulatory authorities of different EEA member states.
Provision of services in Finland from outside EEA
If a credit institution, management company, investment firm, payment institution or insurance company coming from outside the EEA intends to establish a branch in Finland, it must apply for permission from FIN-FSA.
The operations of the credit institution, investment firm, management company, payment institution and insurance company must be conducted in compliance with valid regulations. Furthermore, the financial operating basis and governance must meet the requirements posed to reliable operation.
The domestic legislation of the credit institution, investment firm, management company, payment institution or investment firm must correspond to internationally approved rules for financial regulation and recommendations concerning the prevention of criminal abuse of the financial system. Regulation must be adequately effective. In connection with applying for a permission, the entity must give a statement on the protective system established for the benefit of the depositors and investors of the branch, or lack thereof.
Cross-border provision of services
Investment firms or management companies authorised in a country outside the EEA may provide services across the border subject to permission by FIN-FSA. In this case, there is no requirement to set up a permanent establishment in Finland.
The permission procedure is similar in relevant respects to the procedure for establishment of a branch.
A credit institution from outside the EEA may establish a representative office in Finland by informing FIN-FSA of its establishment. The representative office must have its own premises. A credit institution may not use its representative office to engage in the activities of a deposit bank by eg accepting deposits, pursuing other funds acquisition or granting loans.
The standard Authorisations and notifications by FIN-FSA’s predecessor, the Financial Supervision Authority, contains more detailed information on the prerequisites for granting authorisations.
Alternative investment fund managers – cross-border operations